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Case Code: BECG165
Case Length: 17 Pages
Period: 2010-2020
Pub Date: 2020
Teaching Note: Available
Organization : WeWork Inc.
Industry :Real Estate
Countries : United States, United Kingdom,Germany, China, India
Themes: Accountability/ Corporate Governance/ Conscious Capitalism/ Brand Management/ Business Ethics
Case Studies  
Business Strategy
Human Resource Management
IT and Systems
Leadership & Entrepreneurship

The WeWork Fiasco

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SoftBank invested another US$ 1 billion in WeWork in August 2018 followed by an investment of US$ 3 billion in November 2018. It further invested US$ 2 billion in January 2019, thereby taking its total investment in the company to US$ 10.4 billion (US$ 4.4 billion in 2017, US$ 1 billion in August 2018, US$ 3 billion in November 2018 and US$ 2 billion in January 2019) in January 2019 (See Exhibit II for funding rounds and investors of WeWork). In January 2019, SoftBank wanted to infuse US$ 16 billion, but finally invested only US$ 2 billion. Analysts opined that SoftBank had reconsidered its investment decision looking at the huge loss suffered by the company in 2018. In 2018, WeWork’s losses amounted to US$ 1.61 billion upon revenue of US$ 1.81 billion...

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By October 5, 2019, WeWork was looking for a multi-billion dollar lifeline from JPMorgan and Softbank. JPMorgan, however, was hesitant to infuse funds into the sinking company. On October 22, SoftBank offered an investment of US$ 9.5 billion in a bid to rescue WeWork. However, Neumann still controlled the shares of WeWork post his removal as Chairman of the WeWork Board. SoftBank agreed to offer Neumann US$1.7 billion (US$1 billion for stock Neumann would sell, a US$ 185 million consulting fee, and US$ 500 million in credit) to resign from the company Board. The US$ 1.7 billion payout was seen as a “golden parachute .” ..


Post the bailout, WeWork faced challenges from its largest co-working space counterpart, Chinese company Uncommune. Uncommune had filed a confidential IPO prospectus with the SEC in September 2019, aiming to raise US$ 200 million from the IPO. As of 2019, Uncommune shared workspaces in 200 locations across 37 cities globally. ..


Exhibit I: Prominent Locations where WeWork Operated
Exhibit II: WeWork Funding Rounds and Investors - 2009 to 2019
Exhibit III: Revenue and Losses of WeWork from 2016-2019 in US$ Billion